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MNI ECB Preview - July 2023: Another 25bp Hike. September Remains Open

Another 25bp Hike in July. September Remains Open

  • The ECB will hike policy rates by 25bp and leave balance sheet policies unchanged.
  • Beyond indicating a willingness to tighten further if necessary, the ECB is unlikely to pre-commit to an additional policy rate hike in September.

The ECB will almost certainly hike by 25bp this week after President Lagarde guided markets to another hike at the June meeting. Although economic activity data has recently weakened and several policymakers have highlighted the lagged impact on the economy of previous policy rate hikes, the labour market remains tight and inflation is still someway from target. On balance, there is little to suggest that the ECB would feel compelled to ratchet up the hiking pace, or hit the pause button – both of which represent risk scenarios for this meeting that would be major market moving events.

For the full publication please see:

ECB Preview July 2023.pdf

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